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Networks of value added trade

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  • João Amador
  • Sónia Cabral

Abstract

Global Value Chains (GVCs) became the paradigm for the production of most goods and services around the world. Therefore, linkages among countries can no longer be adequately assessed through standard bilateral gross trade flows and new methods of analysis are needed. In this paper, we apply visualisation tools and measures of network analysis on value-added trade flows in order to understand the nature and dynamics of GVCs. The paper uses data on the bilateral foreign value added in exports from the World Input-Output Database (WIOD) for the period 1995-2011 and, in each period, the GVC is represented as a directed network of nodes (countries) and edges (value added flows). The analysis is extended beyond total trade flows with a view to discussing the distinct roles of goods and services in GVCs. Moreover, the differences between Germany, the US, China and Russia as major suppliers of value added in GVCs are also examined.

Suggested Citation

  • João Amador & Sónia Cabral, 2015. "Networks of value added trade," Working Papers w201516, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w201516
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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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